What’s fuelling Boxing Day sales?

Shopping

I was on BBC Radio London yesterday talking about the Sales.  The idea was that we’re all being duped into buying stuff we don’t need.  Well Duh!!!  Isn’t that the basis of our economy for the last 25 years?

However, I think this year is a watershed.

I have little doubt that the sales are busy.  There has been an increase – year on year – in unsecured debt (overdrafts, personal loans, kitchen loans etc) and of course the iniquitous payday loans are lending more and more (though increasingly it’s people borrowing more to repay an older loan (!!!).  So people are doing the silly thing and borrowing for little reason.

Also, mortgage lending is much higher than last year due to the Govt created mini house price boom (which cannot possibly end well).  Some will have borrowed more than they need for the purchase.  So they have cash burning a hole.

So, there is liquidity in households.  On top of course one of the objectives of a near ZIRP (Zero Int Rate Policy) is to make people take money out of savings and spend it.

So, these are the reasons why people are out shopping.

On top – and this is one of the issues – the retailers have adapted to the net. They know they have to be competitive on price or we’ll look instore and buy online.  So, high street prices are lower.

But why a watershed?

Because I think we are close to the end point.

Households are near ‘peak debt’.  What will be the trigger? Falling house prices.  “Yeah, that’s going to happen Jonathan” – you may be thinking.  As I said on the radio it is not likely an economic shock will be home grown – not with ZIRP and the Govt borrowing a simply massive £110Bns.  However, I am increasingly of the view that an external shock is coming.  2014? Possibly but not likely. Though a stock market crash is more and more possible. 2015 or 2016 is likely.  Be it the US losing control over rates or China imploding on all that funny money they’ve been creating… these are the most likely candidates.

Either (or both) will bring a crash bigger than 2008.  This will likely crash house prices. banks will stop lending, even on houses.  Thus shopping will die as a pastime   Watch this space.

What’s the one thing the Marxists cannot do post a crash? They cannot slash interest rates.  They’re already tiny.

You couldn’t make it up.

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6 Responses to What’s fuelling Boxing Day sales?

  1. Anonymous says:

    so the obvious answer to all of this unpayable debt, lent irresponsibly by banks to the poor is to write down the debt tothe market rate, which is about 5 pence to the pound. raising interests rates without first writing down debt would result in mass riots and lootings, starvation and homelessness that would require a pinochet style military junta with executions etc. mind you – you libertarians love pinochet, the orderer of mass rapes and executions…

    • 1920/21 Pres Warren G Harding

      • Anonymous says:

        you can hardly base an economic theory on 2 years of evidence. and as well as a tax cutter, he also imposed heavy tariffs and introduced an 8 hour day, which is quite statist, isn’t it? also, starvation was the leading cause of death under his admin.

        i would argue that huey long did a lot more to relieve suffering, take on the robber barons and build infrastructure – i guess that’s why he got assasinated.

  2. Anonymous says:

    very good article, apart from the rubbish about the conliblab shower being marxists!

    you should read “neoliberalism” by david harvey – the policies we are enduring today were the result of the mont pelerin society “intellectuals” you claim to admire, funded by robber baron money . suharto, pinochet, thatcher, et al who implemented neo-liberal policies were fervent anti marxists and lassaiz faire liberals – libertarians, if you will.

    orwell wrote very well about “holding 2 contradictory thoughts at once” – blaming marxism or socialism for robber baron corporatism. you couldn’t make it up!

    • Dont agree re Maggie
      The others were fascists

      • Anonymous says:

        “by your friends they will know you” – botha, suharto, pinochet, the CFR, trilateral commission, etc. she was the invented creature of her rich husband, keith joseph, david rockefeller, jimmy savile and lawrence olivier – honest – google it!

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